Biogen earnings: A lesson in how to boost an already pricey stock

By Russ Britt

If you have a pricey stock and want to goose it up by double digits or more, follow the lead of Biogen Idec Inc., which jumped by 11% in early trading Wednesday to more than $336 a share, thanks to an other-worldly earnings report.

Bloomberg

It’s all very simple. All you need to do is what the Cambridge, Mass.-based biotech giant did. Beat second-quarter earnings estimates by more than 23%, best sales projections by 12% and add more than $1.50 on top of the per-share profit forecast for the year, and you too can send investors scurrying for a piece of the action.

The main driver of Biogen’s
/quotes/zigman/91573/delayed/quotes/nls/biibBIIB quarter was that its multple-sclerosis drugs, Tecfidera and Tysabri, not only blew past sales views by 20% or more, but were ahead of what analysts had projected for the next quarter.

That only supported what analysts already have been saying about Tecfidera, the latest drug on the Biogen hit parade.

“Our thesis on [Biogen] is unchanged. We expect Tecfidera to become the leading MS drug and to capture [roughly] 30% share in a $16 billion-plus and growing market,” Cowen & Co.’s Eric Schmidt said in a note to clients.

For the quarter, Biogen said net income was $714.5 million, or $3.01 a share, compared with $490.7 million, or $2.06 a share, for the same period a year ago. Sales were $2.42 billion against last year’s $1.72 billion.

Adjusted earnings were $3.49 a share, well ahead of the $2.83 projection from analysts polled by FactSet. Sales were expected to come in at $2.16 billion.

Emboldened by its earnings report, Biogen raised its full-year earnings estimate to a range of $12.90 to $13.10 a share, up from its previous forecast of $11.40 a share. It also boosted its fiscal 2014 sales view to a range of $9.57 billion to $9.78 billion. In April, the company had forecast full-year sales at $8.73 billion to $8.87 billion.

Tecfidera’s sales came in at $700 million, more than 25% better than the $557.9 million projection from FactSet while Tysabri sales were $533.4 million, 20% higher than the $444.7 million expected.

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